Disruptive Innovation and Higher Education

Clayton M. Christensen, the Robert and Jane Cizik Professor of Business Administration at Harvard Business School, coined the term “disruptive innovation” in a series of books (among them The Innovator’s Dilemma and The Innovator’s Solution) that examined how technological changes altered existing markets for key products and services, usually by lowering prices or making them available to a different (and usually broader) audience. While Christensen’s early work focused on manufacturing industries and commercial services like restaurants, he and his colleagues, in their more recent studies, have turned to key social enterprises such as K-12 education and health care.

. . . [W]hile the complex and multifaceted higher education “system” has grown and expanded its role over time, the authors argue, it has done so largely without any major disruption to the pattern in which colleges and universities are rewarded largely based on selectivity, research and wealth. Given that definition of “quality,” reinforced by rankings and other proxy measures, most institutions join the chase up that ladder.

Though those circumstances have “rendered higher education impossible to disrupt in the past,” the situation is changing, the authors write. Policy makers are demanding that they enroll and successfully educate many more students at a time when their “economic model is already broken”—with public pressure mounting against increasing tuitions and their ability to use “government dollars, . . . endowments and gifts . . . to paper over cost increases” waning, Horn said.

That environment creates an opening for the “disruptive innovation” that has unfolded in so many other industries, from airlines to health care, the authors write. . . . This is typically accomplished through what the authors call an “upwardly scalable technology driver.”

A set of institutions—many, but not all, of them for-profit—have grown significantly over the years by embracing online education more than their peers. Online learning, the authors write, “constitutes such a technology driver” and is essential, they say, as policy makers shift their focus away from “how we can enable more students to afford higher education no matter the cost” and toward “how we can make a quality postsecondary education affordable.

The key question the authors pose is whether traditional institutions can adapt themselves enough to fill this role or “whether community colleges, for-profit universities and other entrant organizations aggressively using online learning will do it instead — and ultimately grow to replace many of today’s traditional institutions.”

. . . [T]he report acknowledges . . . that the expansion-through-disruption they envision will be meaningful and productive only if students receive an education that is both affordable and of high quality “that delivers on a student’s given job.”

One possible way to do so, the authors write, would be to create a new index that would allow innovative institutions to gain access to federal student aid not through accreditation, but by meeting a new set of metrics.

The “quality-value index formula,” as they call it, would rate an institution on four measures:

  • Its 90-day job-placement or school-placement rate.
  • A ratio determined through dividing the increase in its students’ salaries over a period of time after leaving the college by a measure of students’ cost (such as the total cost of attendance or revenue per student).
  • An alumni satisfaction rating (“would you repeat your experience at X university?”).
  • Its cohort default rate.

Read the full article.